Web 2.0 Expo: eBay Tells Developers to Embrace Making Money

EBay is on a mission to woo developers at the Web 2.0 Expo this week in San Francisco.

During a keynote speech Wednesday, eBay CTO Mark Carges told an audience filled with Internet startups that “nothing matters more than getting paid for the hard work that you do.” EBay knows a thing or two about making money, he said, before unveiling a new program to open up the company’s marketplace platform and PayPal services to outside developers.

Mark Carges

On Thursday, Carges elaborated on that plan in an interview. Web 2.0 startups have tended to go after critical mass audience first – and then worry about making money later, he said. “It was easy for one to assume that you can move into an advertising model eventually,” Carges said, “and this has been reinforced by the way that a lot of venture capital firms have run boards of these companies.”

But that kind of thinking is likely going away in the recession out of necessity. Now he wants eBay and PayPal to become a part of startup business models.

Already, much has changed about the way eBay works with outside developers. In its early days, the company discouraged outside programs, such as those that “sniped” on auctions to put in a bid at the last moment. But the company eventually decided that outside services improved the buying and selling experience, and opened up its system. Today, eBay says more than 85,000 developers are taking advantage of its open API system.

Starting the summer, eBay is going to start allowing outside developers to build their applications right into the eBay.com interface, not unlike apps are built into Facebook. Their programs, after being approved by eBay, will be sold through an app store on eBay.com. EBay will take a 20% cut on all of the sales.

“We don’t want to limit the eBay experience to the things we can think of ourselves,” Carges said. Outside developers are more likely to have the vision, time and resources, he said, to find ways to serve niche sales audiences such as people selling baseball cards.

In the coming months, the company also plans to open up PayPal, so that developers can embed it – behind the scenes if needed – as a way to charge or exchange money within an application on the Web, or a phone. (Today, outside programs can use PayPal to bill or move money, but usually just through a Web-based checkout system.)

EBay was building a large interactive online community long before the term Web 2.0 became hip, Carges said. But now that the company is over 10 years old it may suffer a bit from being seen as the old guy in the room. Opening up eBay to developers “is a very big deal, but it is not the first thing that developers think of and say ‘Wouldn’t that be the coolest thing,’” Carges said. “But when they start making money on it, I think they will.”